It’s Quantity, Not Quality, in Canada’s Labor Market

By Don Curren

If quality really is more important than quantity, then things are looking rather grim in Canada’s labor market.

The country has been eking out job gains in the last few months, although the exact size of the gains isn’t clear, given the discrepancies between the labor-force survey and the employer survey that Statistics Canada uses to gauge the health of the labor market.

But many economists believe most of the jobs being created are “low quality,” a short-hand way of saying they offer below-average wages and fewer hours of work each week.

“Simply put, even if the quantity of new jobs is improving, the quality of those jobs remains a big problem,” economists at the independent research firm Capital Economics said in a report. They said the only high-paying sector to buck that trend has been construction.

But the recent slump in new-home sales suggests there could be a drop in construction employment, currently at very high levels when compared to previous years and to other advanced economies.

“Other sectors that pay above average weekly earnings, like manufacturing and mining, are likely to continue to lag, as the still elevated Canadian dollar constrains the former and lower crude oil prices affect the latter,” Capital Economics said.

Job creation over the last 12 months has been weakest in high-paying sectors such as mining, manufacturing, information, management and public administration, which not only account for higher weekly hours worked but also higher hourly earnings.

“Meanwhile, job gains have largely been concentrated in sectors that pay below average wages,” Capital Economics said. “In particular, accommodation and food services, which is the lowest-paying sector, contributed the most to the past year’s overall gain in employment.